Dealers dump GM, say it's not viable to operate

General Motors is finding it hard to keep its dealer flock together. The company now has 223 sales outlets, down from more than 280 a few months agoNandini Sen Gupta&Rajesh Chandramouli | TNN | November 04, 2015, 08:04 IST

CHENNAI: General Motors is finding it hard to keep its dealer flock together. Over the past few months, several dealers have scaled down their points or presence or have surrendered their dealerships due to viability issues. The company now has 223 sales outlets, down from more than 280 a few months ago.

Between April-September, GM India clocked 19,299 units in cumulative sales, down 33% from a year ago. Given that the company has 223 sales outlets, that works out to around 86 or 87 cars per outlet in six months or roughly 15 cars per outlet per month (on an average). "It is impossible to sustain operations with those sales numbers.

We have informed them we will surrender dealership," a dealer told TOI. While some have decided to severe their relations with the American car giant, others have decided to scale down their operations. Gallop in Ahmedabad, GYEEM in Cochin, Trident in Bangalore and many more in Delhi and Maharashtra have reduced their outlets.

The company, however, says it has decided not to expand dealerships as it wants to focus on existing dealers and make their operations viable. When contacted, the GM India spokesperson said in an emailed reply: "From the company's point of view, we have taken a decision not to expand the number of dealerships any further, as we already have a very vast network with 223 sales outlets and 253 service stations spread throughout the country - the focus is on enhancing the quality of the existing dealerships in order to provide a great customer experience."

The decision not to expand the network further is in line with GM India's recently announced turnaround plans, sources said. In July this year, the company had announced fresh investments worth Rs 6,400 crore. This, along with the stoppage of production at its Halol plant to consolidate manufacturing operations in Talegaon, and a pipeline of 10 new models is expected to help the company become profitable in the next five years.

"In order to create a sustainable business environment both for us and our dealers, we have taken some important steps in the past 18 months," "From the dealer's point of view, we have increased the dealer margins to industry-best standards. Our dealers are confident that in coming years, with 10 new product launches, they will be able to create not only a sustainable but a profitable business," said the company spokesperson. Going forward, we are focused on the long term fundamentals of the Indian business, as well as the financial health of our dealers."

GM India's turnaround plans also include an aggressive export strategy whereby one third of its Indian production will be shipped out.